Industry to get on with business following failure of motion to disallow Building Code 2016

Key crossbench senators have stared-down the threats and intimidation from those within the trade union movement and voted down the motion to disallow the Code for the Tendering and Performance of Building Work 2016 (Building Code 2016).

The result provides industry with certainty that Building Code 2016 will take full effect from 1 September 2017. While some had continued negotiations seeking agreements that meet Code requirements, others had decided to wait until moves to disallow the Code were resolved. Now all potential uncertainty has been removed, industry is free to finalise negotiations and this is already starting to happen rapidly.

Media reports have already suggested that some industry participants in Victoria have reached in-principle agreement with the CFMEU on a code-compliant variation to the Victorian CFMEU Pattern EBA 2016-2018. It is understood that the proposed variation has received a preliminary assessment confirming its code compliance from the ABCC.

More broadly, many media reports have focussed on extra items that were requested by unions to ensure their existing pattern agreement was compliant, such as changes to yearly wage increases and conditions for particular categories of workers. These media reports did not, however, mention the removal of many other existing agreement provisions that were restrictive, costly and not consistent with the Code.

Read in isolation, the various media reports infer that cost of achieving Code compliance would be significant. However, it should also be noted that the reports failed to outline the benefit of Code compliance and the limitations/prohibitions it imposes on costly union tactics commonly deployed that represent that majority of factors that adversely affect business costs.

It is important to remember that the intention of the Fair Work Act is to allow workplaces to negotiate and agree on conditions that suit their individual workplace.

Therefore, while a Code-compliant version of any union EBA may be considered appropriate by some industry participants (including, for example, those wishing to vary a non-Code-compliant version of the existing union agreement to make it compliant) it is not going to suit everyone. No-one can be forced into signing any agreement and the union cannot impose it on any business unless it suits the workplace, and is genuinely and freely agreed.

Members should give careful consideration to all aspects of any proposed agreement to determine whether it is in their commercial best interests to agree with it.

It is also important to remember that Building Code 2016 prohibits the use of ‘jump-up’ clauses, where subcontractors are forced to pay the rates and conditions that apply to the head contractor when working on one of their sites.

Contractors are therefore encouraged to satisfy themselves that any additional flexibility provided by a Code-compliant version of any agreement presented by a union delivers sufficient productivity benefits to their businesses and that any potential additional costs are carefully considered and justified in the context of their own business.

Members seeking Master Builders’ assistance on code compliance related matters, including further details on the proposed variation, are encouraged to contact the IR Department on (03) 9411 4560 for further information.